Government's power to block access to the housing market under the Building Safety Act now in force

As we have discussed previously, the Building Safety Bill received Royal Assent on 28 April 2022, becoming the Building Safety Act 2022 (the "Act"). Not all provisions came into force on that day, however. Instead, the changes under the Act are being brought into effect in a piecemeal fashion; with 01 September 2022 seeing sections 126 – 129 of the Act now coming into force.

These sections were not in the earlier versions of the Bill but were added late in the day by the Government, giving them wide powers under s126 &127 of the Act to set up "Building Industry Schemes". These being schemes for "persons carrying on, for business purposes, activities connected with the design, construction, management or maintenance of buildings, including persons carrying on activities in relation to construction products".

Membership to the schemes will only be granted, however, provided an applicant meets the "membership conditions". The exact membership conditions are not yet known, but the Act sets out they may include conditions in relation to remedying historic defective works or paying for those works to be remedied. The parties who potential members contract with and obtain construction products from could also be a determining factor, meaning the impact will be felt throughout the supply chain with the Act requiring a list of members to be kept and published. Membership could also be subject to "competence or conduct" conditions in relation to persons connected with the potential member. This means, the conduct of senior managers and directors may be considered at the application and possibly the renewal stage.

Why then would anyone want to become a member of such a scheme? The answer lies in the second power under s128 & 129 of the Act, for the Government to make regulations prohibiting people from carrying out development in England and from obtaining building control approvals in order to "secure the safety of people in or about buildings…. or improve the standard of buildings".

These new powers are therefore two sides of the same coin, giving the Government the power to block access to the housing market for developers and product manufacturers who do not meet the relevant criteria. The Government's justification for these powers is also clear – with the explanatory notes which accompany the Act setting out that these powers "support the objective of holding industry to account with regard to fixing building safety defects….". That is to say these powers are the means by which the Government can force the industry to pay for historic remedial works.

The timing of s126 – 129 coming into force therefore needs to be put in the wider picture. The Government is involved in on-going negotiations with residential property developers looking for them to commit to a contractual "Building Safety Pledge", under which the developers would commit to remediating unsafe buildings they are associates with. The Government had set a target of 10 August 2022 to finalise the terms of this contractual agreement. However, whilst 49 developers had signed up to the pledge as of 09 August 2022, the terms of the legally binding contract the Government wants them and others to enter into is yet to be finalised. The Chair of the Levelling Up, Housing and Communities committee also expressed concern on 07 September 2022 that the Building Safety Pledge was voluntary and the possibility of delays to remediation where developers do not sign the pledge.

The Government has also been looking for construction product manufactures to sign up to a similar pledge, negotiations on this broke down in April 2022, however, with the Government saying in a letter to the Construction Products Association that it would do "whatever it takes to make sure that construction products manufacturers are held to account",

The bringing in of the new powers under 126 – 129 of the Act therefore needs to be viewed against this backdrop, and it remains to be seen how far Government will go in exercising these new powers to force the industry agree to undertake remedial works.

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